The Business NG - May 15, 2024

In this issue

Today's Edition is Nigerian foreign the exchange market will remain unsettled for a few more months, according to analysts at Coronation Asset Management.

Despite some optimism, turnover data from the
FMDQ Exchange has been ambivalent, leaving questions about where the next large purchase of Naira will come from.

The analysts note that progress is being made,
but it will take time to settle down.

They had projected three scenarios for rates in
the FX markets, and one has been correct, with the authorities allowing the Nigerian Autonomous Foreign Exchange Market (Name) rate to merge with the parallel rate.
However, this merger does not
necessarily mean foreign exchange liberalization has taken place, as there are still various official rates.

Foreign exchange turnover in the NAFEM market has been rising, but not significantly, and data for the parallel market is lacking.

The 30-day moving average has been trending upwards, but without large volumes
soon, it will move down again.
The market needs volumes, but it's unclear
where they will come from.

The central bank has reported $2 billion in foreign portfolio investment in 2024, but the analysts note that this is not large enough given Nigeria's track record in attracting FPI.
Additionally, FPI invested in short-term fixed-income securities needs to be paid back soon, and there is still a backlog of FX demand from Investors and businesses.
The analysts predict that it will take months
to clear the backlogs and stabilize the FX market,
which is unlikely to happen until later in 2024. Despite reports of $30 billion in foreign direct investment commitments, it's unclear when and how soon these will materialize.